Break-even analysis of Medicaid vs fee for service in orthodontic practice: North Carolina as a case study

摘要

Introduction: Access to orthodontic services for children enrolled in Medicaid is limited nationwide. Orthodontists cite low fee reimbursement as a significant barrier to Medicaid participation. The purpose of this study was to examine, under a specific set of practice assumptions, the simulated effect on profitability of treating patients covered by Medicaid in orthodontic practices in North Carolina by using a break-even analysis for the 2005 fiscal year. Methods: Questionnaires were mailed to 154 orthodontists in active practice in North Carolina. The response rate was 58%. Seventy respondents met the eligibility criteria. Respondents were categorized into 4 groups based on the number of 2005 Medicaid case starts (I, 0; II, 1-5; III, 6-12; IV, 13 or more). By using the aggregated responses for treatment fees, treatment times, and overhead percentages for each group, average per-patient costs were calculated for each group and used in a break-even analysis. Results: Group I accounted for 60% of respondents; group II, 20%; group III, 9%; and group IV, 11 %. Assuming that the break-even point had not been reached, the group I practice would have an average estimated loss of dollar164 per patient whereas groups II, III, and IV would realize average profits from dollar98 to dollar256. The breakeven point increased slightly in groups I, II, and III after the total number of patients in the patient pool was increased by 5%, assuming that additional patients were enrolled in Medicaid: group 1,203 to 210; group II, 220 to 226; group III, 158 to 160. The break-even point for group IV was 234 patients. Assuming that the break-even point had been reached, all groups were estimated to realize average per-patient profits of dollar1483 to dollar1897. Conclusions: Break-even analysis is a basic economic concept applicable to orthodontic practices. Under the specific conditions of this study, the inclusion of 5% of patients enrolled in Medicaid in the active patient pool had minimal effect on the financial break-even point and, assuming that the break-even point had been reached, was unlikely to have a negative financial impact on the practice.